How to Protect Yourself in a Recession
Learn tips to help your family as the economy slows.
Feb. 29, 2008 — -- Volatility on Wall Street, the softest housing market in decades, $100-a-barrel oil and declining consumer confidence have led to widespread speculation that the economy is headed toward a recession.
Goldman Sachs, the gold standard for banking, already has used the R word and described the country's economic situation as "an outright recession."
"All signs are pointing that way. The economy is definitely slowing. We know the job story isn't great. Economists were expecting 80,000 new jobs in December. The number was 17,000," said financial contributor Mellody Hobson on "Good Morning America" today.
The worries have echoed nationwide, like in the Philadelphia home of Debby Kinkead, who has struggled to make ends meet.
"We're all starting to like sink because it's getting hard to survive anymore," she said. "We didn't live beyond our means and we did the best that we could with everything. Things do happen, and we just muddle through with it. And [I] hope that things do get better, but it's scary."
"We had savings for the rainy day, and this is now the rainy day," Kinkead added. "How long is that rainy day going to last?"
Despite a dreary outlook, Hobson said bright spots exist.
"Holiday spending beat expectations, and because we're in an election year that could be a good thing," said Hobson. "There's typically not a recession in election year."
Also, despite the fact that unemployment reached a two-year high in December, it remains low by historical standards, according to Hobson.
"The other good news — scores of baby boomers are retiring. If you think you're at risk [of losing your job], dust off that resume, of course network. Also think of one thing many people forget. Know your benefits. Some jobs, like union jobs, benefits do continue even after [your job ends]," Hobson said.
Hobson said even during this time of economic uncertainty consumers can protect themselves.
"A 30-year fixed-rate mortgage is under 6 percent. Lock in if at all possible. If you can't and you think there's the slightest possibility you'll have trouble, contact your lender sooner than later," she said. "It costs the typical lender $60,000 to foreclose on a home. They have as much interest in keeping you in your home as you do. Last but not least, there's a number of government programs put into place, so explore all of those options as well."
